25 February 2009

The Appstore friendly for business? Think twice

Apple definitely hit something big with the AppStore generating millions of dollars of sales. Its revenue sharing is also fair to the developpers. But when you look at it closely you understand that there are a few major flaws in the system that make the AppStore business unfriendly. Like any sales channel, there are a few simple things on which you need visibility to manage successfully your business as a product manufacturer.

The most important one is the relation with the end customer. I remember having started my career in big FMCG firms (Reckitt, Danone), manufacturers had to deal with retailers in order to get some field feedback beyond pure sales number. Retailers eventually control all the key parameters for sales, even if by way of negotiation manufacturers can influence this or that: listing, pricing policy, merchanding, promotional campaigns and other things...Eventually the manufacturer has to take the retailer word for granted, and of course this is not enough. Since the retailer claims he owns the customer, he also owns the intelligence around him and rarely share it. Of course Manufacturers do not stop here and contract with 3rd party companies that can provide better intelligence: Nielsen is one of those companies able to give you a better point of sales snapshot on pricing, merchandising and even competition but those are based on samples.

With the Appstore things are very similar maybe a little worse. Once your app has been approved there is very little you can actually do to control how your business will go. All you have to do, is pray that things go well and if you are good in online promotion you can drive better sales to the Appstore. But you'll do it blindly. For example

you do not have any form of control on the merchandising of your app, meaning how it is displayed in the Store vs other Apps. For example how can i get on the home page, are there internal mechanisms that help me do that?

you do not have any form of promotion mechanism if you want to do a try and buy, or offer your app for free or for a demo. For example many app creators sent me generic apple vouchers to buy their app to try it, but i could have bought anything i wanted

you do not have ANY information on the customer buying your app unless you ask him to register once he installed your app. Apple won t share the iTunes profile

you do not have any form of virtual advertising to promote yourself in iTunes explaining the large numbers of online app directory. You can if you want embed a 3rd party analytics system (like Pinch Media) to understand how your app is used but this is not enough

you do not have any form of analytics or dashboard with the activity around your app (except download and sales), For eg: how many users visited my page, how much time they spend on it. Did they buy the app on the computer appstore or on the mobile appstore?

you do not have a test platform to really measure the pricing elasticity, except by doing it manually, day after day

In other words, the Appstore is a point of sales on which you have rather little way to understand what's really happening and influence really your performance. You have to rely on outbound maketing activities.

A very small % of the apps are really making big money. most apps dont deserve to make a lot but i am sure many would do much better if the app store what not a black box and if it was a little more "open" and feature rich. It could really become a great efficient market place. But, beyond all appearances, it is not.

Are you an iphone app creator? do you agree? do you have more comments or suggestions to make to apple?

update: Fred Wilson in the comments and on his blog is pointing us to a great presentation by pinch media, that only some good analytics tool could lead to. I recommend you read it below